Margaret Lesley Marshall & Anor v Francis G Fleming & Ors

Supreme Court of NSW|2012-05-25|Before: Barr AJ, Brian J, James P, Robert J

The plaintiffs' claim 1HIS HONOUR: The first plaintiff, Margaret Lesley Marshall, is the widow of the late Neil Marshall. On 23 December 1992 Mr Marshall executed a will in which he appointed Mrs Marshall his sole executrix and beneficiary. Mr and Mrs Marshall separated in June 1995 and he began a relationship with one Ms Carruthers. Mr and Mrs Marshall had one child, a son, Kim Marshall, the second plaintiff. Although they never divorced, Mr and Mrs Marshall settled their property affairs in 1996. Mr Marshall appointed Mrs Marshall trustee of a testamentary trust of his estate which was to take effect on his death for the sole benefit of Kim Marshall. Mrs Marshall remained executrix of the will. The effect was that Mrs Marshall was on the death of Mr Marshall to take and execute the whole of Mr Marshall's estate for the sole benefit of Kim Marshall. 2Mr Marshall was killed in a plane crash in South Australia on 31 May 2000. Others were killed as well. Survivors of those killed began proceedings in Pennsylvania, United States of America, against the manufacturers of the aircraft, holding them responsible for the crash and its consequences. Mrs Marshall, on her own behalf and exercising her powers under the will and the trust on behalf of Kim Marshall, joined in the proceedings. She consulted an Adelaide firm of solicitors, Prescotts, and on their advice appointed a New York firm, Kreindler and Kreindler, whose partners are the defendants, to prosecute her claim against the aircraft manufacturers. A funding agreement was made with a body I shall call ILF to fund the proceedings. ILF thereby became entitled to a fee contingent on a successful result. Mrs Marshall and one of the defendants on behalf of all of them executed a retainer agreement. The claim was pursued and the actions of all claimants were settled. Mrs Marshall's share of the agreed total was $US481,250. Out of that sum the defendants were entitled to a contingency fee and the reimbursement of expenses. ILF were entitled to the payment of their contingency fee. So Mrs Marshall expected to receive from the defendants of her share of the settlement after the deduction of all proper fees and expenses. Her solicitors, Turner Freeman, wrote on her behalf demanding payment from the defendants, but payment was not forthcoming. By the time of Mr Marshall's death, he and Ms Carruthers had been in a defacto relationship for five years. The defendants apprehended that Ms Carruthers would make a claim against Mr Marshall's estate and required Mrs Marshall, before they would make over to her the net proceeds, to obtain from an Australian court a judgment as to the relative rights of herself and Ms Carruthers. Accordingly, the plaintiffs reluctantly commenced proceedings in this Court, in effect, seeking orders that Mrs Marshall was entitled to the whole of the fund and Ms Carruthers to none of it. The defendants did make over the net proceeds but only on condition that it be held by a stakeholder pending the determination of that claim. Mrs Marshall realised that Prescotts were acting for Ms Carruthers and instructed Turner Freeman to object. This they did in a letter written on 22 October 2004. On 20 June 2005 Prescotts formally ceased to act for Ms Carruthers. However, they continued to make enquiries on her behalf and to advise her. On 4 November 2005 Turner Freeman wrote inviting Prescotts to undertake no longer to act for, advise or assist Ms Carruthers. They did not do so. On 9 November 2005 the plaintiffs commenced proceedings in this Court for declarations and injunctions against Prescotts and for orders for the production of documents for inspection. Interim orders were made. On 28 February 2007 declarations and injunctions were made effectively restraining Prescotts from acting against the interests of the plaintiffs. Prescotts were ordered to pay the plaintiffs' costs. The plaintiffs' action against Ms Carruthers was resumed and in about June 2008, after a settlement conference, Ms Carruthers conceded that she had no valid claim. Formal orders were made as to the plaintiffs' rights and dismissing Ms Carruthers' cross-claim. Ms Carruthers was ordered to pay costs assessed at $150,000. 3The plaintiffs commenced the present proceedings by filing a statement of claim in February 2009. They pleaded the facts I have summarised, their demand for the payment of the whole of the net settlement amount and the defendants' refusal to pay unless agreement should be reached between the plaintiffs and Ms Carruthers as to their respective entitlements. They asserted that the defendants acted as they did in breach of the express and implied terms of their retainer, in breach of the duty they owed the plaintiffs as their attorneys under the retainer and in breach of the fiduciary duty they owed the plaintiffs as their attorneys under their retainer. They pleaded the undertaking their solicitor had perforce given to the defendants to hold the net settlement amount undistributed until the determination of the Carruthers proceedings. They pleaded that the giving of these undertakings and the commencement of the Carruthers proceedings were necessary only because of the improper conduct of the defendants. The Statement of claim was long and detailed and contained a litany of asserted acts and omissions which, it was pleaded, amounted to breaches of the contract of retainer. In various ways breach of a duty to promote only the interests of the plaintiffs and not to act to their detriment by promoting and protecting the interests of strangers such as Ms Carruthers and of a duty to account to the plaintiffs were pleaded. Also pleaded was an action in the tort of conspiracy to conduct an unlawful act or a conspiracy to perform a lawful act with the predominant object of harming the plaintiffs' interests. 4For present purposes, the important feature of the asserted breaches was that they were committed during the performance by the defendants of their contract of retainer. 5The components of the amounts claimed were essentially the amounts by which the net proceeds of the settlement had been depleted, including by the necessary expenditure on the Prescotts and the Carruthers cases after allowing for costs recovered, amounts deducted by the defendants without accounting for them, the costs of instructing the plaintiffs' own solicitors in their attempts to recover their entitlement, as well as exemplary and punitive damages, costs and interest.

The defendants' response 6The defendants did not file a defence but moved for an order dismissing the proceedings or permanently staying them because this court was not a convenient forum for the hearing of the proceedings. The motion was heard by Rothman J. His Honour held that sufficient grounds had not been established for the conclusion that this Court was an inconvenient forum. His Honour dismissed the motion with costs. 7The defendants appealed to the Court of Appeal. By the time the hearing of the appeal began the plaintiffs had abandoned their action in tort. They were maintaining their claims as to breaches of terms of the contract of retainer, expressed as breach of a duty of care and breach of fiduciary duty. As appears from the judgment of Macfarlan JA at [47], the essence of the defendants' submissions on appeal were as follows:- (a)The primary judge erred in "failing to take into account (or give any weight to) the fact that the dispute principally concerns the professional standards of lawyers practising in New York" .... It is inappropriate that this Court "consider and construe the rules and norms of professional conduct applying in New York, rules which exist in a professional and legal framework with which the Courts of New York are familiar ...".... (b)The system of law with which the transaction had "the closest and most real connection" in accordance with Bonython v Commonwealth of Australia (1950) 81 CLR 486; [1951] AC 201 (and which was therefore the proper law of the Kreindlers' Retainer Agreement) was the law of New York. The reasons for this included that the contract was for the performance of legal services in New York and that Kreindlers, "whose performance was the principal Internet and purpose of the contract, had their place of practice in New York" .... (c)In determining what was the proper law of the Kreindlers' Retainer Agreement, the primary judge erred in attaching importance to the place where the contract was concluded and was in any event wrong in his conclusion as to where that was. As to the latter issue, there was no basis for the finding, which was central to the primary judge's conclusion concerning the place where the contract was concluded, that Prescotts were the agent of Kreindlers rather than the agents of the Marshalls .... (d)It is relevant that Kreindlers were insured only for proceedings commenced against them in the United States. His Honour failed to have regard to a clause in the professional indemnity insurance policy that stated that to be the case .... 8Senior Counsel for the plaintiffs sought to uphold the conclusion of Rothman J that the proper law of the retainer was New South Wales law but submitted that in any event the determination of the proper law should await the final hearing of the action. He conceded that if the proper of the retainer were New York law there was a time bar of three years. The plaintiffs had not commenced these proceedings within that period, so their action would fail. That concession, of course, was made on the pleadings as they stood. 9Macfarlan JA, with whom Spigelman CJ and Sackville AJA agreed, concluded that if the proper law of the retainer were New York law the plaintiffs would fail in their action. Their Honours accepted that any action thereafter commenced in New York would fail because of the time bar. Macfarlan JA said this in summary - [18] I have concluded that the factor which is of primary importance in relation to the application for a stay is that the alternative forum in which Kreindlers contend that the Marshalls should sue, or should have sued, (namely New York) is unavailable to the Marshalls because, so the parties have accepted, the Marshalls' claim is statute barred under New York law ... [19] Although my preliminary view is that New York law is that which governed the contract of retainer upon which the Marshalls sue, in the particular circumstances of this case I do not consider that to be a significant factor in favour of Kreindlers' contention that new South Wales is a clearly inappropriate forum for resolution of the parties' disputes ... 10All the members of the Court concluded that the Supreme Court of New South Wales was as well placed as a New York court to determine the proper law of the retainer. 11Spigelman CJ said this about the defendants' submissions about the professional standards of lawyers practising in New York - "2 Mr P Braham SC, who appeared for the appellants, submitted that, even if it were eventually to be found that the contract of retainer is governed by Australian law, an issue with respect to professional conduct of New York lawyers would arise. He contended, on that basis, this Court was a clearly inappropriate forum to determine such a matter. 3 Mr Braham SC referred to the terms of the pleadings which assert that the failure to pay the settlement amount, at the time that the solicitors for the respondent demanded payment, was in breach of "the terms of Kreindlers' retainer (both express and implied)". No particulars are provided of any relevant term of the contract. Specifically, there is no articulation of any implied term. 4 Mr Braham SC submitted that any such implied term must be based on what was proper professional practice in New York with respect to the payment of monies, in the circumstances in which the appellant firm found itself with respect to the obligation to account. 5 The professional conduct standards of a New York lawyer may very well have been at the centre of the cause of action in tort. That action has now been abandoned. It is not clear whether or not any such issue will arise in the cause of action in contract. The appellants have not sought particulars of any implied term. Accordingly, there is no basis for this Court to conclude that the respondent will allege a term that gives rise to an issue concerning the professional standards of legal practice in New York, let alone that there is any controversy between the parties about such a matter. 6 In any event, as Mr Braham SC accepted in the course of his submissions, the weight to be given to the fact that an issue of foreign law arises, when determining whether or not a stay of proceedings in New South Wales should be ordered, has been significantly attenuated by the adoption of a new procedure in this Court. The rules now permit the Court to refer such an issue for determination by the relevant foreign court, as distinct from adopting the traditional approach of choosing between conflicting expert evidence. The rules also expressly authorise the appointment of a referee for this purpose. (For the relevant background see J J Spigelman "Proof of Foreign Law by Reference to the Foreign Court" (2011) 127 Law Quarterly Review 208.) 7 Part 6 Div 9 of the Uniform Civil Procedure Rules 2005, reinforced by s125 of the Supreme Court Act 1970, makes provision for the identification of a dispute between the parties on an issue of foreign law which, with the consent of the parties, may be the subject of an order that proceedings be commenced in a foreign court in order to answer a question as to the principles of foreign law or as to their application. 8 The rules further expressly empower the Court to refer such a matter for determination by a referee, pursuant to the long established provisions for the appointment of referees. Such a referee could come from and sit in the foreign jurisdiction. Although consent of the parties is not a condition of the exercise of a power to make such a reference it has, nevertheless, long been the practice of the Court to do so only with the consent of the parties. 9 Pursuant to a Memorandum of Understanding between myself, as Chief Justice of New South Wales, and the Chief Judge of New York, a reference of a question of law from this Court to New York will be determined by three appellate judges selected by the Chief Judge to answer the question or questions referred by this Court. The New York judges would not sit as the New York Court of Appeals, but would sit as volunteer referees. 10 It is by no means clear whether the present case is one in which this mechanism for deciding such an issue would be more cost effective than the customary means of determining a question of foreign law by expert evidence. However, the determination of an issue of professional practice is one of the kinds of legal issues for which there is unlikely to be a single correct answer. Advice from three serving appellate judges of the foreign jurisdiction is much more likely to be accurate than an Australian judge choosing between contesting expert reports. 11 As this mechanism is available if sought, I would reject the submission of Mr Braham SC, that the possibility that an issue of this character may arise in the present proceedings is entitled to weight in determining whether this Court is a clearly inappropriate forum. " 12The Court of Appeal gave judgment dismissing the appeal on 8 April 2011 and ordering the defendants to pay the plaintiffs' costs.

The amendment 13On 3 May 2011 of the defendants' solicitor wrote to the plaintiffs' solicitor a letter that included the following - "In light of the matters raised by your clients in the Court of Appeal, and in particular, your clients' abandonment of the tort claims, we consider it is appropriate for your clients to amend its pleading in the Supreme Court proceedings. We therefore await service of a draft Amended Statement of Claim so that we may seek our clients' instructions to consent to it being filed." 14On 29 September 2011 the defendants' solicitor wrote again threatening to move for dismissal if there were no progress within 14 days. The plaintiffs' solicitor asked the Registrar to list the matter for directions and the Court appointed 28 October. The plaintiffs' solicitor informed the defendants' solicitor, who asked to be informed of the orders the plaintiffs would be seeking. On 27 October the plaintiffs' solicitor replied, enclosing draft short minutes of order providing for the filing of an amended statement of claim by 23 December and a defence and a reply by stated dates. On the same day the defendants' solicitor wrote refusing to consent to the allowance of two further months to file and serve an amended statement of claim but stating a preparedness to agree to an order requiring the filing such a document by 4 November. The solicitor threatened again to move for a dismissal if the plaintiffs should not agree. Both solicitors attended before the Registrar and made submissions about the time that should be allowed to amend. There was no discussion about the contents of the proposed amendment and there was no draft document. The Registrar allowed the time requested by the plaintiffs. On 15 December 2011 the Court extended the time for the filing of an amended statement of claim to 16 January 2012. The plaintiffs filed their amended statement of claim on 13 January 2012. 15The amended statement of claim was substantially different from the original. By it the plaintiffs abandoned not only their claim in tort but also all assertions that the defendants had breached their contract of retainer. Instead the plaintiffs pleaded that having fully performed the terms of their retainer from the plaintiffs and having thereby becoming entitled to be paid their contingency fee the defendants assumed a duty to indemnify and keep indemnified the plaintiffs in respect of the net settlement amount. This was stated to be a common law or equitable duty under the law of the State of New York which arose on the conclusion of the retainer and operated independently of it. It arose by virtue of the defendants' status as fiduciaries or trustees and obliged the defendants to indemnify the plaintiffs for all legal costs and other expenses and losses occasioned to the plaintiffs by the requirement imposed on them by the defendants at the conclusion of the retainer including the demand that the plaintiffs obtain a judgment of a Court of competent jurisdiction in New South Wales as to their entitlement to the net settlement amount as a condition of the defendants' release of the net settlement amount. They also pleaded that these obligations arose under a quasi-contract between them and the defendants according to the common law of New York. 16The principal features of the substituted cause of action were that - (a) The plaintiffs no longer asserted that the defendants had breached the terms of their contract of retainer, so no question arose as to the proper law of the retainer. (b) The plaintiffs sued the defendants not as lawyers but as fiduciaries and trustees. The applicable law was the law of New York. (c) According to the plaintiffs, the cause of action pleaded attracted a time bar under New York law of 6 years. So much appears from a letter supplying particulars written by the plaintiff's solicitor on 22 February 2012. If the plaintiffs were correct the important consequence was that these proceedings were commenced within that period, so they were not bound to fail.

The dispute over the amendment 17On 13 February 2012 the defendants' solicitor wrote asserting that the amendments went "beyond the scope of what was contemplated" when consent was given to the grant of leave to amend. Particulars were requested and supplied. On 8 March 2012 the defendants served a notice of motion seeking orders disallowing the amended statement of claim or striking it out. The motion was listed for hearing. When it was called on before me the defendants sought and were granted leave to file a further amended notice of motion seeking these orders -

An order pursuant to Rule 36.16 of the Uniform Civil Procedure Rules 2005 ('UCPR') and section 14 and/or 90 of the Civil Procedure Act 2005 ('CPA'), setting aside order 1 of Registrar Bradford made on 28 October 2011 and disallowing the Amended Statement of Claim dated 16 January 2012;
An order pursuant to Rule 14.28 of the UCPR striking out the Amended Statement of Claim;
In the alternative to orders 1 and 2, an order pursuant to section 65(3) of the Civil Procedure Act 2005 that the amendments have effect from 16 January 2012;
An order pursuant to Rule 13.4 of the UCPR dismissing the proceedings. In the alternative to prayers for relief 1-4 above, the following orders:
That as a condition of being permitted to amend, the plaintiffs pay the defendants' costs thrown away by the amendments including all of the costs of the proceedings in the Court of Appeal and before Rothman J; and
That there be the separate determination of a question in the proceedings, that is the date upon which the cause of action relied upon by the plaintiffs became statute barred under the law of New York. 18On 13 March 2012 the defendants filed a notice of motion in the Court of Appeal seeking a stay of execution of its costs order pending resolution of the further amended notice of motion. The motion was remitted to the Common Law Division for hearing. 19The plaintiffs have expert evidence as to the six-year time bar for which they contend. The defendants contend otherwise and have expert evidence to support their contention. I was not asked to determine whether the plaintiffs were statute-barred but only, if the defendants should fail to obtain the principal relief they sought, to decide whether the issue should be determined separately from the main action. 20If the plaintiffs are correct about the six-year limitation period they can bring themselves within the bar, but only by the operation of s65 of the Civil Procedure Act 2005. Relevantly the section is as follows - 65 Amendment of originating process after expiry of limitation period (1) This section applies to any proceedings commenced before the expiration of any relevant limitation period for the commencement of the proceedings. (2) At any time after the expiration of the relevant limitation period, the plaintiff in any such proceedings may, with the leave of the court under section 64 (1) (b), amend the originating process so as: - ... (c) to add or substitute a new cause of action, together with a claim for relief on the new cause of action, being a new cause of action that, in the court's opinion, arises from the same (or substantially the same) facts as those giving rise to an existing cause of action and claim for relief set out in the originating process. (3) Unless the court otherwise orders, an amendment made under this section is taken to have had effect as from the date on which the proceedings were commenced. ... 21If the amended statement of claim stands and the Court does not make an order under subs (3), the substituted causes of action will not be statute-barred because the statement of claim was filed within the six-year period.

The first order sought 22The first order sought setting aside the Registrar's order of 28 October 2011 and disallowing the amendment was based on what said to be a step taken without leave. Mr Braham, senior counsel for the defendants, submitted that the plaintiffs were given a date to do something, but not leave to do what they did. There was no draft document. The defendants consented only to a timetable. If they had seen a draft of the proposed amended statement of claim they would not have consented and the Registrar would not have made the order he did. Mr Braham pointed to the statements in the correspondence I have summarised. 23I do not accept the submissions. Having failed to obtain the draft he asked for, the defendants' solicitor stopped asking. In his letter of 27 October 2011 he made no mention of a draft or of the nature of the proposed amendment but confined himself to the time to be allowed for amendment. In court, the defendants consented to an amendment, contesting only the time to be allowed, and did not raise the substance of it. It is not correct to say that all the Registrar gave was a date. He granted unfettered leave to amend. The plaintiffs were in my view entitled to take every proper advantage of the leave granted according to its terms. They never undertook to the defendants to amend only in ways consented to by them. I refuse to disallow the amendment.

The second, third and fourth orders sought 24Orders 2, 3 and 4 of the further amended notice of motion may be considered together. Because when they filed the amended statement of claim the plaintiffs were out of time to commence proceedings, an order under s65(3) that it have effect only from then would be tantamount to a strike-out or a dismissal. Moreover, there could be no reason for making such an order other than such as would justify striking out or dismissing the amended statement of claim. The question for the Court is whether, in the circumstances in which it came into existence, the amended statement of claim should be struck out or dismissed. That is something the defendants have to establish. 25Rule 14.28 of the Uniform Civil Procedure Rules 2005 (the Rules) is as follows - Circumstances in which court may strike out pleadings (1) The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading: (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or (b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or (c) is otherwise an abuse of the process of the court. (2) The court may receive evidence on the hearing of an application for an order under subrule (1). 26Rule 13.4 of the Rules is as follows - Frivolous and vexatious proceedings (1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings: (a) the proceedings are frivolous or vexatious, or (b) no reasonable cause of action is disclosed, or (c) the proceedings are an abuse of the process of the court, the court may order that the proceedings be dismissed generally or in relation to that claim. (2) The court may receive evidence on the hearing of an application for an order under subrule (1). 27Mr Braham SC did not submit for the purpose of either rule that the amended statement of claim disclosed no reasonable cause of action. He submitted that for various reasons the amendment had produced prejudice and delay and was an abuse of the process of the Court. 28Relying on the judgment of the Justices of the High Court of Australia in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175, Mr Braham SC submitted that - (a) Since filing the statement of claim in February 2009 the plaintiffs had had ample opportunity to identify the causes of action arising from the facts and circumstances of the matter but took almost three years to plead the new causes of action. (b) If the amendments were allowed the defendants would suffer prejudice because they applied for a stay of proceedings based on certain causes of action, lost and were ordered to pay costs at first instance and on appeal. By their amendment the plaintiffs had entirely abandoned the basis pleaded and had substituted a new basis. So the claims adjudicated by Rothman J and the Court of Appeal would be rendered otiose. (c) The time and resources of the Court have been wasted since the Court of Appeal exercised its discretion on the basis that there was a real issue about the proper law of the retainer. That issue was removed by the amendments. The amendments introduced causes of action said to arise wholly under the law of New York. So the determination by the Court of Appeal of the real issues was undermined. The amendments were a tactical instrument whose employment resulted in a waste of the Court's time and resources. (d) The amendments are inconsistent with the plaintiffs' arguments at first instance and in the Court of Appeal. (e) The amendments were brought for an improper purpose, namely to avoid the findings of the Court of Appeal. So they were an abuse of process. (f) If the amendment stood the defendants would face an entirely new set of allegations explicitly brought under New York law. The plaintiffs were suing New York lawyers for work done in the United States of America. It would therefore be necessary to litigate again the question where the proceedings should be heard. If the plaintiffs had begun as they now wish to continue the defendants would have succeeded in the Court of Appeal because the issue that tied the Court of Appeal decision would not have existed. 29In Aon Risk Services v ANU [2009] 239 CLR 175 the High Court of Australia considered amendment under rules not significantly different from those arising here. At [17] French CJ said - Section 24(7) of the Act of 1873 was originally enacted as part of a reform process designed to avoid a multiplicity of proceedings in different courts. That imperative, imported into its statutory offspring in Australia, also applies to the avoidance of a multiplicity of proceedings in the same court. Nevertheless, as indicated in the passage quoted by Gibbs J in Philip Morris, practical considerations of convenience are relevant to its application. The same is true for Rules of Court which, in relation to amendment of pleadings, give effect to the original objective of the section. They confer a flexibility which was not intended to provide parties with a tactical instrument, and their deployment as such should not be permitted where it wastes the time and resources of the court and other parties. 30In their joint judgment, Gummow, Hayne, Crennan, Kiefel and Bell JJ said this - 96. An important aspect of the approach taken by the plurality in JL Holdings was that it proceeded upon an assumption that a party should be permitted to amend to raise an arguable issue subject to the payment of costs occasioned by the amendment. So stated it suggests that a party has something approaching a right to an amendment. That is not the case. The "right" spoken of in Cropper v Smith needs to be understood in the context of that case and the Rule, which required amendment to permit the determination of a matter already in issue. It is more accurate to say that parties have the right to invoke the jurisdiction and the powers of the court in order to seek a resolution of their dispute. Subject to any rights to amend without leave given to the parties by the rules of court, the question of further amendment of a party's claim is dependent upon the exercise of the court's discretionary power. ... 98. Of course, a just resolution of proceedings remains the paramount purpose of r 21; but what is a "just resolution" is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs. 99. In the past it has more readily been assumed that an order for the costs occasioned by the amendment would overcome injustice to the amending party's opponent. In Cropper v Smith Bowen LJ described an order for costs as a panacea that heals all. Such a view may largely explain the decision of this Court in Shannon v Lee Chun, which upheld a decision allowing the plaintiff to raise a new case at the second trial, but which imposed a condition as to costs. The modern view is that even an order for indemnity costs may not always undo the prejudice a party suffers by late amendment. In the present case it is difficult to see that such an order could be sufficient compensation, given that Aon would be required to again defend litigation which was, effectively, to be commenced afresh. ... 111. An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. Statements in JL Holdings which suggest only a limited application for case management do not rest upon a principle which has been carefully worked out in a significant succession of cases. On the contrary, the statements are not consonant with this Court's earlier recognition of the effects of delay, not only upon the parties to the proceedings in question, but upon the court and other litigants. Such statements should not be applied in the future. 112. A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate. 31There seem to me to be two overwhelming features of this case. The first is that although the statement of claim was filed more than three years ago virtually no progress has been made towards a hearing on the merits. This is because the defendants have preferred to exercise their rights to pursue interlocutory relief than to defend the proceedings. So far there has been no indication that they have considered the merits of the plaintiffs' claim, amended or unamended. There has been no sign of a defence. So while delay has resulted from the desire of the plaintiffs to amend, it is insignificant compared to the time that has had to be devoted to the interlocutory inquiry required by the defendants. The first strike-out motion was filed some time between 27 February 2009 and 1 September 2009 and the Court of Appeal gave judgment on 8 April 2011. The Court record is incomplete and the precise time taken up with interlocutory matters cannot be calculated, but it may exceed two years. 32The second feature is the nature of the amendment. Leaving aside detail and any change in the manner of expression, what the plaintiffs say the defendants did that entitles them to relief has not changed. It is that they wrongfully required the plaintiffs to go to the trouble and expense of having an Australian court declare their interests in the corpus, with the added complication of the necessary action against Prescotts. In that respect there is no need for the defendants to reconsider, if they have considered, how they might respond. Apart from a suit in quasi-contract, the only substantial change is in the capacity in which the defendants are sued, not as lawyers acting in the course of their retainer but as fiduciaries and trustees. 33I conclude that the amendment has not inconvenienced the defendants at all in their defence of the plaintiffs' claim. 34I do not consider that in amending the plaintiffs have deployed a tactical instrument, to use the words of French CJ. They have reconsidered their case and have pleaded substantially the same facts in a way which, if they are right, will relieve them of the stricture of the shorter limitation period and afford them a hearing on the merits. 35I conclude that the defendants have suffered little prejudice. I do not think that the amendment was made to undermine or be a collateral attack upon the determination of the Court of Appeal. I do not think that the amendment was made for any improper purpose and I do not think that there has been an abuse of process. As I shall explain, I do not think that the changes made by the amendment necessitate the re-litigation of issues so far decided. 36The defendants have not made good their case for striking out the amended statement of claim or dismissing the proceedings.

The sixth order sought 37Order 6 seeks a direction that the question whether the plaintiffs are statute-barred under the amended statement of claim be separately determined. There are two reasons why I refuse to make such a direction. First, it is not ordinarily appropriate to determine such a question ahead of the principal proceedings: Wardley Australia Limited v AWA (1992) 175 CLR 514 at 533. It is only in the clearest of cases that such a separation should be made. This does not seem to me to be a clear case. Secondly, so to direct would further fragment proceedings which have been fragmented enough. The resolution of this dispute is proving far from just, quick and cheap. I would not encourage further delay. It is high time the defendants defended the action and the parties made some positive move towards a hearing on the merits.

Costs and the fifth order sought 38The defendants seek the costs of the hearing before me whatever the result. Even if the amended statement of claim were allowed to stand, Mr Braham SC submitted, the plaintiffs ought to pay the defendants' costs because they came to the Court seeking an indulgence. Reference was made to general statements to that effect in G.E. Dal Pont, Law of Costs, 2nd ed, Butterworths, 2009 at 14.35. But the cases cited in the ensuing passage show that that is not an invariable rule. In the same way, r 42.6 of the UCPR, to the same effect, applies unless the Court orders otherwise. The reasonableness of the conduct of the respondent is something to be taken into account, see Wendt v Northwood (No 2) [2003] NSWSC 871 at [10]. Here, as I have said, the defendants by their solicitor consented to amendment without limitation except as to time. The plaintiffs complied with time limit as extended by the Court. In the circumstances the defendants were in my opinion unreasonable in bringing an application on an assertion that the amendment was made without leave. In my opinion they should not have their costs. 39Additionally, the defendants have failed to make good the other attacks brought upon the amended statement of claim. It seems to me that they should be ordered to pay the plaintiffs' costs. 40Additionally, a party whose opponent obtains leave to amend pleadings may ordinarily expect to receive the benefit of an order compensating the party for costs thrown away by the amendment. They would ordinarily be the costs of re-pleading. No occasion for such relief arises here, however, because the defendants have not yet put on a defence. 41The basis of order 5 sought in the further amended notice of motion is that the hearings before Rothman J and the Court of Appeal have been rendered a waste of time. The submission was that if amendment were allowed the claims adjudicated by Rothman J and the Court of Appeal would be rendered otiose and it would be necessary to litigate again the question where the proceedings should be heard. So the Court should vacate Rothman J's costs order. Although the costs order of the Court of Appeal has merged in its judgment, and because a Judge sitting at first instance lacks power to vacate an order of the Court of Appeal, Mr Braham SC suggested that the Court might impose on any leave granted a term that the plaintiffs undertake not to enforce the Court of Appeal's costs order. 42I do not agree that the effect of the amendment has been to render otiose adjudications made by Rothman J and by the Court of Appeal. The defendant's contention before Rothman J and the Court of Appeal was that New South Wales was forum non conveniens. The defendants lost before Rothman J. As appears from the judgments of the members of the Court of Appeal, that was for the wrong reason. Notwithstanding that the Court of Appeal considered that the proper law was the law of New York, it concluded that the defendants as appellants had still not established that New South Wales was forum non conveniens. That was because the then existing question about the applicable limitation period and questions concerning the law of New York could be answered in this Court. 43The defendants' purpose in bringing the motion at first instance and the appeal was not to force the plaintiffs to bring their claim in any other forum but, relying on the time bar, to bring their case to an end without a hearing on the merits. That explains why they have never filed a defence. Their attitude is exemplified by their desire to obtain an order in the terms of order 6 of the further amended notice of motion. 44It would be impertinent for me to express any opinion on the prospects of success of any motion for a stay of proceedings on the ground that the amended statement of claim had rendered New South Wales forum non conveniens. It is sufficient to say that I am not satisfied that the amendment has made it necessary to litigate again the question where the proceedings should be heard. 45The defendants brought an application and an appeal. Both were dismissed and costs orders were made. It is not correct to characterise the costs expended in the interlocutory proceedings as costs thrown away consequent upon the amendment. Nothing about the amendment of the pleadings since then ought in my opinion to relieve them of their obligations under those orders.

Orders 46I make the following orders:

The further amended notice of motion is dismissed.
The motion for a stay of proceedings of the Court of Appeal's costs order is dismissed.
I order the defendants to pay the plaintiffs' costs of the further amended notice of motion and of the motion remitted by the Court of Appeal.
I stand the proceedings into the Registrar's List at 9am on a date to be fixed for further directions.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 June 2012

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